- The Pound to US Dollar exchange rate is -0.1% lower @ $1.31306 today.- The Dollar to Pound exchange rate is $0.76158.
Some foreign exchange analysts predict a recovery in global growth in the coming year could mean US Dollar exchange rates are in for a weaker performance, and this speculation is even keeping the US currency under pressure today.
A lack of major US data is leaving the US Dollar reacting to movement in rival currencies, as well as of course global growth and crises.
The biggest moving US Dollar exchange rate of the day was GBP/USD, which has advanced over half a cent to weekly highs. This has been largely due to broad Pound movement today. Investors are buying the British currency amid hopes that the Bank of England (BoE) will not cut UK interest rates as soon as next week.
Meanwhile, EUR/USD has been kept under pressure near the level of 1.1085. The Euro has been able to avoid further losses due to stronger than expected Eurozone sentiment data, but recovery is limited ahead of tomorrow’s European Central Bank (ECB) policy decision.
Dollar Exchange Rates Lack Direction amid Speculation of Weaker Outlook
The US Dollar has seen mixed performance this week so far.
Investors started the week out hesitant to buy the US Dollar due to speculation regarding a coronavirus spreading from central China. The virus’ spread caused concern that if it escalates, it could cause damage to economic activity and travel around China.
Due to China’s contribution to global growth, as well as the impact this could have on the recently formed US-China ‘phase one’ trade deal, the news dampened the US Dollar slightly. It benefitted safer US Dollar rivals, such as the Japanese Yen (JPY).
While coronavirus concerns have lightened a little since earlier in the week though, investors are still anxious about the US Dollar outlook.
Due to the US Dollar’s appeal in times of global political and trade uncertainties it has seen much strong performance over the past year.
However, analysts are increasingly speculating that the global economy is showing signs of recovery. If this continues, investors will be more willing to take risks and safe havens like the US Dollar will be less appealing.
According to Mark McCormick, Global Head of Foreign Exchange at TD Securities:
‘The global economy looks like it’s healing,
The reduction of uncertainty will likely allow investors to take risks ... they didn’t want to take before.’
Upcoming US Data Could Influence Fed Speculation
Demand for the US Dollar could remain mixed for the time being, as investors await more news that could influence the US and US Dollar outlooks.
This week’s US data isn’t likely to be hugely influential, but some stats due in the coming days could still affect outlooks if they surprise.
Tomorrow will see the publication of US jobless claims, as well as Kansas Fed manufacturing data.
Friday’s data could potentially be the most influential of the week though. US PMI projections from Markit, while typically less influential than ISM PMIs, will give investors a better idea of how the US economy is performing at the start of 2020.
Impressive data could further soften Federal Reserve interest rate cut speculation and boost US Dollar exchange rate support.